If a currency increases in value in response to market forces, this process is known as
a. reflation.
b. revaluation.
c. appreciation.
d. value-added.
c
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Assume there is no way to prevent someone from using an interstate highway, regardless of whether or not he or she helps pay for it. This characteristic is called
A. nonexcludability. B. nonrivalry. C. nontaxability. D. nondiscrimination.
Real business cycle theory explains variations in prices, employment, and real Gross Domestic Product (GDP) by focusing on
A) changes in real variables such as supply shocks, technological changes, and shifts in the composition of the labor force. B) anticipated changes in fiscal policy enacted by the government. C) the effects of the Phillips curve. D) anticipated monetary policies enacted by the Fed.
Assume that the actual inflation rate is 3 percent, the target inflation rate is 3 percent, and that the percentage difference between actual and potential real GDP is 2 percent. According to the Taylor rule, the federal funds rate target should be
A) 3.5 percent. B) 6.5 percent. C) 5.5 percent. D) 5.0 percent.
Open market operations involve
A) the buying and selling of existing corporate bonds. B) the buying and selling of existing corporate stocks. C) the buying and selling of existing federal government bonds. D) the buying and selling of Federal Reserve bonds.